Absolute purchasing power parity means that the real exchange rate is 1:1.

Name: Absolute purchasing power parity means that the real exchange rate is 1:1.
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Absolute purchasing power parity states that the real exchange rate between two countries should be 1:1, meaning that goods in each country should have the same nominal price after converting currencies. However, this does not always hold true in practice due to differences in production costs, trade barriers, and other factors.

Absolute Purchasing Power Parity Means That the Real Exchange Rate